This thesis describes a short term water demand forecasting application that is based upon a combination of a neural network forecast generator and a rule based system that modifies the resulting forecasts. Conventionally, short term forecasting of both water consumption and electrical load demand has been based upon mathematical models that aim to either extract the mathematical properties displayed by a time series of historical data, or represent the causal relationships between the level of demand and the key factors that determine that demand. These conventional approaches have been able to achieve acceptable levels of prediction accuracy for those days where distorting, non cyclic influences are not present to a significant degree. However, when such distortions are present, then the resultant decrease in prediction accuracy has a detrimental effect upon the controlling systems that are attempting to optimise the operation of the water or electricity supply network. The abnormal, non cyclic factors can be divided into those which are related to changes in the supply network itself, those that are related to particular dates or times of the year and those which are related to the prevailing meteorological conditions. If a prediction system is to provide consistently accurate forecasts then it has to be able to incorporate the effects of each of the factor types outlined above. The prediction system proposed in this thesis achieves this by the use of a neural network that by the application of appropriately classified example sets, can track the varying relationship between the level of demand and key meteorological variables. The influence of supply network changes and calendar related events are accounted for by the use of a rule base of prediction adjusting rules that are built up with reference to past occurrences of similar events. The resulting system is capable of eliminating a significant proportion of the large prediction errors that can lead to non optimal supply network operation.